DCA announces ‘Telecommunication Reform Package’

23 Jun 2017

Australia’s Department of Communications and the Arts (DCA) has published a press release to unveil the ‘Telecommunication Reform Package’, saying that the new legislation will ‘promote competition and to improve access to broadband services for all people in Australia, especially those in regional, rural and remote areas’.

Among the key elements of the bill, which was tabled in Parliament on 22 June, Statutory Infrastructure Provider (SIP) obligations seek to ensure that all premises have access to superfast broadband services (defined as downlink speeds of 25Mbps or higher and an upload rate of 5Mbps). In addition, this part of the legislative package will also make nbn – the company responsible for the National Broadband Network (NBN) – the default so-called ‘infrastructure provider of last resort’. As such, there will be a requirement on nbn to connect premises and supply wholesale broadband services on reasonable request. NBN Co will become the SIP for areas as it rolls out its network and it will be the default SIP for the entire country once the NBN is declared complete and fully operational.

Meanwhile, the government will establish a Regional Broadband Scheme (RBS) to ensure there are long term sustainable funding arrangements in place to provide broadband services in regional and remote areas. Currently, nbn’s fixed wireless and satellite networks provide broadband access to around one million premises across regional Australia. The DCA has claimed, however, that this infrastructure is expected to incur losses totalling AUD9.8 billion (USD7.4 billion) over the next 30 years, with losses expected to be funded via an ‘opaque internal cross-subsidy from nbn’s profitable fixed line networks’. The new RBS will set out to make this cross-subsidy transparent, and it will require other competing fixed line networks to contribute to the cost of funding broadband for regional Australia. According to the DCA, by the time the NBN rollout is completed in 2020, 95% of the RBS will be paid for by NBN, with the remaining 5% covered by competing NBN-comparable wholesale networks.

Finally, the last core element of the legislation is new wholesale and retail rules to encourage competition. Changes to separation rules (i.e. requirements for network owners to have separate wholesale/retail businesses) will reportedly ensure that all new superfast broadband networks operate on a level playing field. Since that start of 2011, new high speed broadband networks have been required to be wholesale-only. Now, the government is amending these rules to make them clearer and more effective, and allow network providers to run separate wholesale and retail businesses on a ‘functionally separated’ basis. It is claimed this will create new commercial opportunities for providers and encourage them to invest and compete to offer better services for consumers. Network providers will need to obtain the approval of the Australian Competition and Consumer Commission (ACCC) by submitting a functional separation undertaking to it. The reform package will also give the ACCC the power to exempt very small operators (i.e. those serving less than 2,000 residential customers) from the separation requirement.

In terms of next steps, the DCA notes that the SIP arrangements and new arrangements for networks servicing small businesses will commence once the legislation is passed by the Parliament. Meanwhile, the RBS and ‘arrangements for networks to have wholesale and retail businesses’ will start on 1 July 2018.